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Federal Water, Other Issues Have North Dakota Lawmakers Working Overtime

Federal proposals to expand the definition of intrastate waters that can be regulated, along with a host of other energy issues, have the North Dakota state legislature working overtime. Up to 27 bills could impact the state Department of Mineral Resources (DMR), which regulates oil and natural gas activities.

State officials signaled last fall that they were gearing up for possible fights with federal agencies over proposed water redefinitions and an added listing of endangered species in the middle of the state's leading oil-producing areas (see Shale Daily, Nov. 18, 2014).

The so-called "Waters of the United States" redefinition being contemplated by the U.S. Environmental Protection Agency (EPA), which has large potential impacts for oil/gas operations, has spawned a lower house bill (HB 1432) and a House continuing resolution (R 3009). Last year, North Dakota asked EPA to "withdraw the redefinition and start all over."

"The legislature wants to establish a formal advisory council that works on these federal regulatory issues and has money available for litigation, mitigation and whatever they need to spend money on to avoid water-related impacts that might come out of a new Waters of the U.S. definition or an endangered species listing, etc.," said Lynn Helms, DMR director, during a webinar last Friday.

"There is lots of activity over at the state capitol; we're tracking 60 bills, 27 of which could directly impact us," Helms said, adding that he expects a number of the bills will "go away."

One proposal by Democratic Sen. Connie Triplett that would have drastically cut the time producers can flare gas without having to pay royalties was shot down in committee by the Republican majority, Helms said. "There were two bills introduced, and one was defeated and the other was heavily amended so it doesn't deal with flaring at all," he said. "I think increasing the time limits on flaring is off the table as far as the legislature is concerned. It will remain the job of the Industrial Commission."

In December, the statewide gas capture level reached 76%, which is 1% shy of the goal producers must meet when the January production totals are tallied next month, Helms said. "I met with a handful of companies in December and January who are able to capture well in excess of the 77% level, so we're confident that the January [statewide] totals will come in around 77%."

The fall off of rigs and backlog of well completions is helping producers "catch up" in terms of the state's new, more stringent gas capture requirements, Helms said. "It has meant some reduced oil production in order to get there and an enormous increase in the number of mini-wellsite gas processing units. When we started this process in October, there were only one or two of those units in the field, and there are in excess of 100 of them now."

Helms said the slowdown in production and numbers of rigs operating has brought benefits to the efforts to rein in the amount of wellhead gas being flared. "The backlogging of wells not completed and the slowdown in rig count has given companies breathing room to achieve the gas capture goals more easily," he said.

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